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Homework answers / question archive / Bank of America faces the following inflows and outflows during the coming month: 1

Bank of America faces the following inflows and outflows during the coming month: 1

Finance

Bank of America faces the following inflows and outflows during the coming month: 1. deposit withdrawals of $66 million 2. Customer loan repayments of S2016 million 3. sales of assets $72 million 4. operating expenses of $204 million 5. new loan request accepted of $588 million 6. deposits of S1340 million 7. borrowings from the money market of $86 million 8. nondeposit service fees of $54 million 9. borrowings to be repaid of $46 million 10. divided payment of $560 million 11. extraordinary expense of $100. What is Bank of America's projected net liquidity position for the coming month?

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Solution :

Projected Net Liquidity Position for the coming month of Bank of America can be calculated as follows :

Net liquid asset are a measure of an immediate or near-term liquidity position of a bank, calculated as follows

Net Liquidity Position for the coming month -

= Total Cash Inflows - Total Cash Outflows

Here,

Total Cash Inflows = Customer loan repayments + Sales of assets + New Deposit + Borrowing from money market + Non deposit service fees

= ($2016 + $72 + $1340 + $86 + $54) million

= $3568 million

Total Cash Outflows = Deposit withdrawals + Operating expenses + New loan request accepted + Borrowings repaid + Dividend payment + Extraodinady expenses

= ($66 + $204 + $588 + $46 + $560 + $100)

= $1564 million

Therefore, Net liquidity position for the coming month

= $3568 million - $1564 million

= $2004 million.

Hence, Net liquidity position for the coming month of Bank of America is $2004 million.

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